Retailers are overhauling their operations as technology redefines the shopping experience. One initiative that has proven effective is the expansion into e-commerce, which has helped the industry sustain its same-store sales growth and keep pace with the S&P 500’s 9.1% return over the past six months.
Regardless of these results, a cautious approach is imperative as many companies in this space can be value traps. With that said, here is one consumer stock boasting a durable advantage and two we’re steering clear of.
Two Consumer Retail Stocks to Sell:
American Eagle (AEO)
Market Cap: $4.01 billion
With a heavy focus on denim, American Eagle Outfitters (NYSE:AEO) is a specialty retailer offering an assortment of apparel and accessories to young adults.
Why Is AEO Not Exciting?
- Muted 2.2% annual revenue growth over the last three years shows its demand lagged behind its consumer retail peers
- Lack of new stores puts a ceiling on its growth and reflects a focus on optimizing sales at existing locations
- Underwhelming 9% return on capital reflects management’s difficulties in finding profitable growth opportunities, and its falling returns suggest its earlier profit pools are drying up
American Eagle’s stock price of $23.14 implies a valuation ratio of 14.3x forward P/E. Check out our free in-depth research report to learn more about why AEO doesn’t pass our bar.
America's Car-Mart (CRMT)
Market Cap: $194.3 million
With a strong presence in the Southern and Central US, America’s Car-Mart (NASDAQ:CRMT) sells used cars to budget-conscious consumers.
Why Do We Pass on CRMT?
- Lagging same-store sales over the past two years suggest it might have to change its pricing and marketing strategy to stimulate demand
- Issuance of new shares over the last three years caused its earnings per share to fall by 74.7% annually while its revenue grew
- 19× net-debt-to-EBITDA ratio shows it’s overleveraged and increases the probability of shareholder dilution if things turn unexpectedly
At $23.40 per share, America's Car-Mart trades at 66.9x forward P/E. If you’re considering CRMT for your portfolio, see our FREE research report to learn more.
One Consumer Retail Stock to Watch:
Dick's (DKS)
Market Cap: $17.98 billion
Started as a hunting supply store, Dick’s Sporting Goods (NYSE:DKS) is a retailer that sells merchandise for traditional sports as well as for fitness and outdoor activities.
Why Does DKS Stand Out?
- Rapid rollout of new stores to capitalize on market opportunities makes sense given its strong same-store sales performance
- Brick-and-mortar locations are witnessing elevated demand as their same-store sales growth averaged 4.3% over the past two years
- Projected revenue growth of 46.8% for the next 12 months is above its three-year trend, pointing to accelerating demand
Dick's is trading at $200.46 per share, or 15.3x forward P/E. Is now the right time to buy? Find out in our full research report, it’s free.
Stocks We Like Even More
Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.
The names generating the next wave of massive growth are right here in our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.